The First Expedition Against Canada, and Paper Money.

In 1690 an expedition was fitted out against Canada, the payment for which was to come from the booty. It came back not only without booty, but in great misery. The soldiers were clamorous for pay, and it was to satisfy their demands that the first paper money was issued. This expedition cost the colony,£50,000. £7,000 were issued in notes from 5s. to £5, receivable for taxes, and for goods paid into the treasury for taxes.

Sir William Phipps tried to sustain the paper by giving coin for some of it, but the soldiers disposed of it at one-third discount. The issues were limited to £40,000, and £10,000 in the treasury were ordered burned in 1691. In 1692 it was ordered that the bills be received at 5 per cent. advance over coin at the colonial treasury, and the Court promised to redeem them in money within twelve months. This kept the paper at par for twenty years. In the same year legal interest was reduced to 6 per cent. The barter currency now ceased for a time, or at least became less common. Felt and Bronson both quote Madam Knight's letter that, in Connecticut, there were four prices: “pay,” “pay as money,” “money,” and “trusting.” The merchant asked his customer how he would pay before fixing the price. “Pay” was barter at the government rates. “Money” was Spanish or New England coin, also wampum for change. “Pay as money” was barter currency at prices ⅓ less than the government rates. “Trusting” was an enhanced price according to time. A sixpenny knife cost 12d. in pay, 8d. in pay as money, and 6d. in coin.

Paper was now issued to pay the annual charges of the colony of Massachusetts, but it was also drawn in by taxes, and it does not appear that the amount in circulation at any one time was excessive. In 1702, money being scarce, taxes slowly paid, and government affairs hindered, £ 10,000 were issued, secured on the import and excise, and £6,000 taxes were voted. By this tax all the bills out were to be withdrawn and destroyed. In 1704 a royal proclamation fixed the value of Spanish and other foreign coins, not at sterling rates, but apparently on the basis of the New England coinage. Little heed was paid to it. The current rates of the coins obeyed other than royal laws.